Whats a capital gain?
Capital gain is the profit you make on the sale of property, either personal like stocks and bonds or real property like real estate. The costs of acquiring and disposing of the property are deducted from the profit and 75 per cent of the balance is added to your taxable income. If you had a $1,000 capital gain, after expenses and a marginal tax rate of 50 per cent, $750 would be added to your income and you would pay $375 in taxes. The capital gains provision of the Income Tax Act came into effect Dec. 31, 1971 — so any profit made before this date is exempt from taxation. The most significant exemption is one’s home or principal residence. The $100,000 lifetime capital gains exemption is no longer in effect.
